Indonesian taxpayers that invest in specific sub-sectors in the marine and fisheries industries are eligible for income tax incentives. The criteria are governed under Minister of Marine Affairs and Fisheries Regulation 35 of 2022.
The incentives come in the form of a deduction of net income from the total investment value, the accelerated depreciation of tangible assets, and the accelerated amortization of intangible assets, among others.
There are several criteria that investors must fulfill to obtain these incentives. These include investing in specific business sectors of the marine or fisheries industries, undertaking local, value-added processing activities, investing in products with a high export value, and hiring local workers.
Indonesia has one of the most diverse marine biodiversity and fertile fishing grounds in the world. Having also the second longest coastline in the world, the fisheries industry plays a vital role in the economy. Indonesia is the second largest aquaculture producer globally behind China with an average of 15 million metric tons of aquaculture produced annually.
What are the available income tax facilities for investors in Indonesia’s marine and fisheries industries?
The available income tax incentives are regulated under Government Regulation 78 of 2019 (GR 78/2019).
Deduction in net income of the total investment
The government offers a deduction of the net income by 30 percent of the total investment value. This is in the form of intangible assets including land, charged at five percent per year for six years. The intangible assets must be used in the main business activities.
Accelerated depreciation of tangible fixed assets
The government offers the accelerated depreciation of tangible assets, is illustrated as follows.
|
Type of fixed tangible asset |
Benefit period |
Depreciation rates and method |
|
|
|
|
Straight line method |
Declining balance method |
|
Non-buildings |
|||
|
Category I |
2 years |
50% |
100% |
|
Category II |
4 years |
25% |
50% |
|
Category III |
8 years |
12.5% |
25% |
|
Category IV |
10 years |
10% |
20% |
|
Buildings |
|||
|
Permanent |
10 years |
10% |
- |
|
Non-permanent |
5 years |
20% |
- |
Accelerated amortization of intangible assets
The government offers the accelerated amortization of intangible assets, as illustrated below.
|
Type of intangible assets |
Benefit period |
Amortization rate |
|
|
|
|
Straight line method |
Declining balance method |
|
Category I |
2 years |
50% |
100% |
|
Category II |
4 years |
25% |
50% |
|
Category III |
8 years |
12.5% |
25% |
|
Category IV |
10 years |
10% |
20% |
Compensation for losses
There is also compensation available for losses of more than five years but for no more than 10 years.
Reduction in income tax on dividends
Investors can also receive a reduction on their income tax on dividends at a rate of 10 percent. This can be lowered even further if there is an applicable double tax avoidance agreement in place.
What are the criteria to obtain income tax facilities?
Investors can obtain income tax incentives under two conditions;
- Invest in certain business sectors within the marine and fisheries industries; and/or
- Invest in these business sectors within certain regions in Indonesia.
Further, these investments must be:
- Of high value or with the intention for exports;
- Absorb a large number of local workers; or
- Have a high local content percentage.
The requirements to invest in certain business sectors in Indonesia’s marine and fisheries sectors are illustrated below:
|
No. |
Business sector |
Indonesian standard industrial classification (Klasifikasi Baku Lapangan Usaha Indonesia/Kbli) |
Scope of products |
Criteria |
Requirements |
|
1. |
Pisces/Finfish Catching at Sea |
03111 |
All types of fish (Pisces), except sharks. |
An investment value of more than 10 billion rupiah (US$650,000) |
− Carrying out Pisces/Finfish catching activities at sea in all permitted zones within the Fishery Management Area of the Republic of Indonesia; and − Carrying out Pisces/Finfish catching activities at Sea while simultaneously carrying out processing activities under the classification codes KBLI 10211, KBLI 10212, KBLI 10214, KBL
|
|
2. |
Crustacean catching at sea |
03112 |
All types of crustaceans |
An investment value of more than 10 billion rupiah (US$650,000) |
− Undertaking crustacean-catching activities at sea in all permitted zones in the Fishery Management Area of the Republic of Indonesia; and − Carrying out crustacean-catching activities at sea while simultaneously carrying out processing activities as described under the classification codes KBLI 10222, KBLI 10293, or KBLI 10299.
|
|
3. |
Mollusk catching at sea
|
03113
|
All types of mollusks
|
An investment value of more than 10 billion rupiah (US$650,000)
|
− Carrying out mollusk catching activities at sea in all permitted zones in the Fishery Management Area of the Republic of Indonesia; and − Carrying out mollusk-catching activities while simultaneously carrying out the processing as described under classification codes KBLI 10221, KBLI 10293, or KBLI 10299.
|
|
4.
|
Enlargement of sea Pisces/Finfish
|
03211
|
All scopes of products included in this KBLI
|
− An investment value of at least 25 billion rupiah (US$1.6 million)
− For export, at least 80 percent of products are exported; or
− A workforce of at least 100 people, with at least 90 percent of the workforce being Indonesian citizens.
|
- |
|
5. |
Enlargement of sea mollusks
|
03215
|
All scopes of products included in this KBLI
|
− An investment value of more than 10 billion rupiah (US$650,000); or
− A workforce of at least 50 with a at least 90 percent of the workforce being Indonesian citizens.
|
- |
|
6. |
Enlargement of sea crustaceans
|
03216
|
All scopes of products included in this KBLI
|
− An investment value of more than 10 billion rupiah (US$650,000); or
− A workforce of at least 50 people, with at least 90 percent of the workforce being Indonesian citizens.
|
- |
|
7. |
Fish freezing industry
|
− 01021
|
− All types of fish (Pisces), except sharks − Tuna: loin, steak, saku, meat, slice and/or cube − Demersal fish fillet
|
− An investment value of at least 50 billion rupiah (US$3.2 million) and at least 50 percent of products are exported; or
− Having a workforce of at least 50 people, with a at least 90percentbeing Indonesian citizens.
|
- |
|
8. |
Minced meat and surimi based industry
|
10216
|
Surimi and surimi based products: meatballs, sausages, fish cakes (otak-otak), dragon legs (kaki naga), shumais (siomay), fried moneybags (ekado), fish fingers, crabmeat imitations, fish balls, fish nuggets, fish sticks, crab sticks, chikuwa and/or kamapoko
|
− An investment value of at least 50 billion rupiah (US$3.2 million) ; − At least 50 percent of productd are exported; or
− A workforce of at least 50 people, with at least 90 percent being Indonesian citizens.
|
- |
|
9. |
Seaweed processing industry
|
10298
|
Refined carrageenan
|
− An investment value of at least 50 billion rupiah (US$3.2 million) ;
− At least 50 percent of the products are exported; or
− Having a workforce of at least 50 people at least 90 being Indonesian citizens.
|
- |
Investing in certain business sectors, as well as in certain regions in Indonesia.
|
No. |
Business sector |
Indonesian standard industrial classification (Klasifikasi Baku Lapangan Usaha Indonesia/Kbli) |
Scope of products |
Provinces |
Criteria |
Requirements |
|
1. |
Enlargement of freshwater fish in floating net cages |
03222 |
− Nile Tilapia − Silver Catfish |
All provinces in Indonesia, except Greater Jakarta |
− An investment value of more than 10 billion rupiah (US$650,000);
− Having a workforce of at least 50 people with at least 90 percent being Indonesian citizens. |
-
|
|
2. |
Other aquatic biota freezing industries |
10293 |
− All types of Crustaceans − All type of Mollusks − Frozen Shrimps |
All provinces in Indonesia, except Greater Jakarta |
− An investment value of more than 75 billion rupiah (US$4.8 million) − At least 50 percent of products are exported; or − Having a workforce of at least 100 people with at least 90 percent being Indonesian citizens. |
-
|
|
3. |
Other processing and preservation industries for other aquatic biota |
10299
|
Breaded Shrimp |
All provinces in Indonesia, except Greater Jakarta |
− An investment value of more than 75 billion rupiah (US$4.8 million); − At least 50percent of products are exported; or − Having workforce of at least 100 people with at least 90 percent being Indonesian citizens.
|
- |
